The ATO has developed an assessment tool, to help determine the viability of a business. The assessment considers a range of information that is linked to the financial performance and position of the business. This includes the business’s ability to pay its outstanding debts, while meeting its ongoing commitments to creditors.
Viability is defined as the ability to survive. In a business sense, that ability to survive is ultimately linked to financial performance and position.
A business is viable where either:
- it is returning a profit that is sufficient to provide a return to the business owner while also meeting its commitments to business creditors
- it has sufficient cash resources to sustain itself through a period when it is not returning a profit.
To view further detail, and to access the ATO viability tool, click here